{"id":7476,"date":"2018-03-03T17:10:48","date_gmt":"2018-03-03T11:40:48","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=7476"},"modified":"2019-06-13T16:12:42","modified_gmt":"2019-06-13T10:42:42","slug":"co-operative-bank-license","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/co-operative-bank-license\/","title":{"rendered":"Co-operative Bank License in India"},"content":{"rendered":"

Co-operative banks are small-sized entities structured in the co-operative sector which function together in urban & non-urban centers. In India, co-operative banks finance small debtors in industrial & trade sectors, also professional & salary programmes. The co-operative banking organization in India is isolated into 4 components i.e.chiefly co-operative credit society, central co-operative bank, state co-operative banks & land development banks. Urban co-operative banks are divided into weak & urban banks, grounded on certain limits of their performance. Co-operative banks are structured by the Reserve Bank of India<\/a> & governed by the Banking Regulations Act, 1949, & Banking Laws (Co-operative Societies) Act, 1965. Rural co-operative banks are controlled by the state registrar of co-operatives.<\/p>\n

Urban co-operative banks essential have a min capital of ₹ 4 crores & membership of at least 3,000 in a population of in excess of ₹ 10 lakh. The figure for minimum membership keeps decreasing with a decrease in population. Urban co-operative banks are required to maintain SLR equivalent to 25% of net demand& bank liabilities.<\/p>\n

A co-operative bank<\/a> is classified as a weak bank if its own funds get eroded to the extent of 25% or more by doubtful debts or if it’s overdue exceed 50% of outstanding loans & advances. Or otherwise, if the bank is unsuccessful to obey with min share capital standards. It used to be easy to open a cooperative bank with as little capital as ₹ 15 lakh. But no more so. RBI is forthcoming up with new rules in which min capital requirement for the cooperative bank would be revised to ₹ 4 crores from earlier ₹ 15 lakh.<\/p>\n

The Reserve Bank said the minimum capital requirements for cooperative banks will soon go up to as much as ₹ 4 crores from the present ₹ 15 lakh. Under the existing norms, a cooperative bank can be set up with a minimum capital of ₹ 15 lakh, which will now be increased to ₹ 50 lakh for banks in the backward areas &₹ 3 crores for urban areas which already have banking infrastructure.<\/p>\n

Reserve Bank of India has in existing periods studied the authorizing policy for Urban Co-operative Banks (UCBs) pursuant to the approvals of the High Power Committee established for investigative the current licensing policy amongst other regulatory issues. Co-operative banks function on the basis<\/a> of ‘no-profit no-loss’.<\/p>\n

Co-operative banks, as a principle, do not pursue the goal of profit maximization. So, these banks do not an emphasis on contribution more than the basic banking services. So, co-operative banks finance small borrowers in industrial & trade sectors, besides professional & salary classes.<\/p>\n

Some cooperative banks in India are more forward than many of the state & private sector banks. According to NAFCUB (National Federation of Urban Co-operative Banks & Credit Societies Ltd), the total deposits & lending of cooperative banks in India is much more than old private sector banks & also some new public sector banks. This exponential growth of co-operative banks in India is recognized mostly to their much better local reach, personal interaction with customers, & their ability to catch the nerve of the local clientele.<\/p>\n

Regulatory Functions<\/strong><\/h2>\n